How To Decide If A Joint Account Is A Good Fit

Among young, starry-eyed couples hoping to advance their relationship through either marriage or cohabitation, there is one aphorism that will rear its green-eyed head sooner or later: People are funny about money. When you take the plunge to sign a lease together — a legal commitment! — you’re officially blending your financial lives. You’ve promised to not leave each other for at least the next 12 months, which signs you up for joint expenses including rent, groceries, utilities, internet, random household supplies — and whose Netflix are you using?

In many relationships, there is one partner that’s a little more, let’s say, concerned, about making sure the refrigerator is stocked with food, the bathroom cabinets are flush with toilet paper, and your load of laundry isn’t without soap. It’s this person that will typically run out and do the shopping as needed. But each time they return, do they bill their partner $5.50, for the half-gallon of Tide detergent they’re likely to consume?

Maybe.

Some couples, married or otherwise, will split all expenses down the middle, even that jug of detergent. Others will instead opt to each take a few bills. For example, one will take the utilities, groceries, and household expenses, while the other handles rent and internet.

Others will choose to open up the much-discussed joint checking account. It certainly has its drawbacks: At most banks, either party can close the account and assume all remaining funds at any time, and if you don’t trust your partner with money, this is most definitely not the solution for you.

That said, a joint account can be a huge time-saver that adds convenience to both parties, and it doesn’t have to be the end of financial independence. A 2014 survey by TD Bank found that 42% of couples with joint accounts also maintain separate accounts, and 26% of Millennials were prompted to open that joint account when moving in with a partner. Typically the shared account will be for easily paying the shared expenses outlined above — 65% are used to pay rent or mortgages — with each party able to deposit and withdraw.

Another option is to use the joint account for savings, which is what 84% of Millennials with joint accounts are choosing.

Assuming that you’ll maintain your separate accounts, how much do you throw into the joint fund? That’s another important conversation to have with your partner. If you both have relatively similar incomes and expenses, you’ll likely both put in the same amount to cover your monthly goal. But if there’s a stark income disparity, that might not be as feasible or comfortable. In those cases, you can discuss each putting the same percentage of your income into the shared account. For example, you could both commit 25% of your incomes to the shared account to balance expenses more equitably.

Whatever you and your partner decide to use your joint account for, there is one nonnegotiable: communication. You’ll need to be on the same page about where your money is going and how much is in the account at all times to avoid accidental overdrafts or bounced checks. Deciding how to split your finances is an important conversation that both of you should feel comfortable having and satisfied with the result. But if you can’t talk about money, you probably shouldn’t be sharing it.

Anum

Anum Yoon is the founder and editor of Current on Currency. She loves all things personal finance, which is why you'll find her work all over the PF blogosphere.